Mortgagee sale listings in 2019 increase by 61%
By EdgeProp Singapore / EdgeProp Singapore | January 24, 2020 8:01 AM SGT
SINGAPORE (EDGEPROP) – The number of mortgagee sale listings in Singapore has seen a 61.1% jump y-o-y, from 391 in 2018 to 630 in 2019, boosted by more listings from the industrial, retail and residential segments. These findings were released in a Knight Frank market report on Jan 17. In 4Q2019, the number of auction listings (which include repeat listings) saw a 23.9% y-o-y climb to 1,387. However, the success rate of auctions (based on listings) also fell, from 3.1% in 2018 to 1.4% in 2019. Overall, Knight Frank says from 2018 to 2019, the rise in listings is linked to more applications for bankruptcies and increased volatility within the equity markets. Slowing economic growth and the trade war between China and the US have also led to an accumulation of bad debts and a fall in top-line growth, triggered some owners to default on mortgage payments.
The trend contrasts against the years of 2014 to 2017, when the surge in mortgagee sale listings was due to higher retrenchments, hikes in interest rates, and drop in rental income.
Residential mortgagee sale listings see three consecutive years of increase
Mortgagee sales of residential properties has also risen for the third consecutive year, surging by 62,6% y-o-y to 356 listings in 2019. In particular, listings of landed residential property under mortgagee sales increased from 18 in 2014 to 99 in 2019. Meanwhile, those with asking prices above $5 million rose to 42 listings in 2019, from the 30 in 2018. In fact, 2019 saw a rise in listings of properties concentrated in prime Districts 4 (Sentosa Cove, Keppel Bay, Harbourfront and Telok Blangah), 9 (Orchard Cairnhill and River Valley) and 10 (Ardmore, Bukit Timah, Holland Road and Tanglin).
Knight Frank believes this increase stems partially from the slower residential market. “Higher additional buyer’s stamp duties and tighter loan-to-value ratio held back potential buyers, especially those looking for residential properties that commanded higher price quantum,” it states. This in turn led to properties languishing for a longer period of time in the market. For those who can’t hold on to their property, owners’ sales have turned into mortgagee sales.The properties under mortgagee sale were also found to undergo more rounds of auctions before they were transacted via private treaty.
Non-landed residential mortgagee sale listings rise
There was also a significant jump in non-landed residential listings under mortgagee sale, from 139 listings in 2018 to 257 in 2019.
In 2019, such listings from District 9 alone dominated other districts. This was a contrast from 2014 when properties from Districts 4, 9 and 15 (Katong, Joo Chiat and Amber Road) have consistently accounted for a significant proportion of the listings as these districts comprise a larger stock of private, non-landed homes. The number of penthouse listings – not limited to prime districts – also spiked significantly from 23 in 2016 to 68 in 2019. The properties also went through more auction rounds – averaging 2.6 rounds in 2019 – compared to an average of 2.2 seen in 2018.
Industrial, retail mortgagee sales overview
Meanwhile, listings of industrial properties under mortgagee sales increased by 34.2% y-o-y, to 153 in 2019, as industrialists faced higher financial pressure. An uncertain external environment and contraction of the manufacturing sector affected the financial cash flows of end-users, notes Knight Frank. Likewise, investors also faced greater difficulty in leasing out the units. On the other hand, the number of retail property listings under mortgagee sale in 2019 more than doubled to 103. Slower retail sales in 2019 also exacerbated the challenges faced by the retail market. According to the Singapore Department of Statistics, the retail sales index fell for the ninth consecutive month in October 2019. There has been a clear trend for retail properties listed under mortgagee sale – all the properties had floor areas smaller than 1,000 sq ft, and opening prices below $1.8 million. The weaker performance of the retail rental market, with the rental index now at 16.6% below its peak, has placed further stress on distressed owners who needed to service expensive mortgages, notes the property consultancy. Retail properties also underwent more rounds of auctions as buyers were more conservative, given the backdrop of a slower rental market in the strata-retail segment. In 2019, a retail unit went through about 3.4 rounds of auctions on average, higher than the average of 2.7 rounds in 2018.
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